Saint Warren’s dark side (The ugliness of the billionaire that the media overlooks)

Imagine a Republican president regularly invoking the wisdom of a multibillionaire businessman who had profited off companies with questionable business practices, and who law-enforcement officials had recently asked to provide information about his own company’s questionable practices. No question about it: Democrats and the media would be having a field day.

True, the double standard involving Buffett’s business record is longstanding. But now Obama is using him as a central prop in his class-warfare strategy for winning a second term.

Yes, Buffett is a great investor; his Berkshire Hathaway company has made him a multibillionaire and earned shareholders lots of money. But in all my years in journalism, I’ve never seen a business figure get such a free pass from the media even when his public pronouncements are oozing with hypocrisy, let alone when he steps over the line into sleaze — as Buffett has done on more than one occasion.

But then “St. Warren” wears his liberal politics on his sleeve: He wholeheartedly backed Obama back in 2008, and now is lending his name (and his secretary’s) to Obama’s cockamamie tax scheme, a k a the Buffett Rule — which would barely make a dent in the federal deficit, but would certainly squeeze small-business owners and other job-creators.

Now, Buffett’s hypocrisy on taxes is well known to readers of these pages: He decries the fact that rich investors like him get taxed mainly at the lower capital-gains rate of 15 percent. Yet he made his vast fortune enjoying that favorable treatment, and largely kept his mouth shut until now, as he nears the end of his long career. Plus, he plans to use a charitable trust to further shield much of his income from taxes.

It is easy to understand, very easy and it has nothing to do with guilt but everything to do with power.

When one reaches the very top, the pinnacle, there are few left standing and invariably they form political pacts.

The goal is to keep those in the pact protected from risks posed by significant outsiders, the ‘competition’. The way this is done is to cut the competition down with onerous taxes and regulation.

Buffett’s deceptive ruse about his low rate of taxation relative to his secretary is a scam and he knows it. The few at the top will always have the power to escape taxation such that it empowers them but not so for their possible adversaries. Buffett’s ruse is to set the tone for taxing the rich.

What are ‘the rich’? The ‘rich’ are not the wealthy. Not even the ‘very rich’ are members of a class known as ‘wealthy’. What is the difference?

The very rich are exemplified by retired professionals (surgeons, attorneys, former pro athletes etc.) who spend time on the golf course, who typically vote Republican, hold several million in liquid securities, own shares in many businesses, have significant real estate holdings but most importantly are able to pay all their expenses BY LIVING OFF THE INTEREST OF THEIR INVESTED CAPITAL (1ST ORDER INTEREST).

The ‘wealthy’ are distinguished by their ability to pay all their expenses BY LIVING OFF THE INTEREST OF THE INTEREST OF THEIR INVESTED CAPITAL (2ND ORDER INTEREST).

The ‘rich’ must scramble and hustle to retain the value of their capital. The ‘wealthy’ need not be so concerned as
their 2nd order status allows their 1st order capital to grow in value; they are insulated.

In order to control membership into the class of wealthy, the existing members of the wealthy class must control policies of taxation. Their goal is to tax the rich into oblivion (hold them back) and to pick and choose favorites for consideration into the wealthy club (example Zuckerberg IPO).

The democrat party is the party of choice for the wealthy class as they are able to control labor, tax the rich (the future competition of the wealthy) and to carve special interest tax policies for wealthy constituents.

This behavior of the wealthy against the rich has been going on for centuries; ruling classes against merchant classes, land barons against rail road barons etc.

Buffet is a fraud and that is not opinion but is fact. He for many years advertised that his salary as Chairman for Berkshire was only 100 grand. And it was a true statement. But his income from Berkshire was enormous.

Here is how Buffett, Gates and others do it, see if you can follow:

Sell/transfer tens of billions of dollars of stock into a charitable trust (CT) for which they control as executors. Donate all income from all assets including those placed in the CT back to the CT. That is a lot of income and it is not taxed. Do not take income from the trust as it would be taxable.

Now here is the key part:

Because the wealthy benefactor is so crucial to the operation of the trust, there must be insurance for the trust in case the wealthy benefactor dies; ‘Key Man Life Insurance’.

The wealthy benefactor of the CT takes out a very very large whole term life insurance policy on themselves with beneficiary to their CT.

With me so far? Now next is how the wealthy ones get money tax-free:

The whole term life insurance policy can be negotiated, a loan can be taken out on it. The interest on the loan can be zero percent to one or two percent, in other words nearly nothing.

NOW NOTE: Proceeds in the form of loans against whole life insurance are NOT TAXABLE.

All of the above is known by large money managers but it has too many parts for the voting public to absorb and understand. Money managers say to make the above scheme work you need at least, at the very least 25 million to put in the trust. This eliminates most doctors, lawyers and rich business professionals. In other words, the affluent rich are sitting ducks for the crosshairs of the tax policy formulators in Congress. But the wealthy can escape being targets.

All of the above can be summarized simply as follows:

“Once one has the keys to the treasure, let no one else have the keys.”

Now perhaps you can understand what Buffett is thinking when he says we must tax the ‘rich’.

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